Two startups recently came to my attention that offers creative solutions to help people resolve legal disputes.

Their methods include online reputation shaming, game theory tactics, and settlement negotiation, all in the hope of achieving better, faster settlements for far less expense than more traditional ‘in-person’ methods. The two online dispute resolution services I’m referring to are PeopleClaim and Fair Outcomes.

Monica Goyal

Shame on You

PeopleClaim’s service speeds resolutions along by putting the reputations of complaint targets on the line. For a small fee of $7.96, PeopleClaim will send a complainant’s (sender) complaint to its target (receiver), allowing the receiver an opportunity to negotiate a settlement directly with the sender or to send PeopleClaim a rebuttal.

If neither party registers a settlement with PeopleClaim within two to four weeks of the original complaint being sent (depending on the claim), PeopleClaim will post both the complaint and the rebuttal, if submitted, on its site for anyone to see. If no settlement is registered within 90 days of the original complaint, PeopleClaim will refund the sender his/her money.

Receivers have an incentive to engage the sender and resolve the dispute before the deadline so that the complaint does not get published on PeopleClaim’s home page. One worrying feature of the site is that it doesn’t post the identities, pseudonyms or real, of the complainants. Receivers of complaints suffer the risk of reputational damage, but complainants do not, giving them no incentive (except, apparently, for the risk of banishment from PeopleClaim for filing a false claim) to complain in good faith.

Fair Game?

Fair Outcomes uses game theory and other models of decision-making in their four dispute-resolution services (you can read a good introduction to game theory here). It currently offers four services, which purport to facilitate resolution of disputes in joint ownership, property division and ecommerce, as well as general disputes.

Its Fair Buy-Sell system, useful for allotting assets between former joint owners of property, is an automated negotiation system into which both sides negotiate the price of a jointly owned asset or set of assets. The buyer enters the value that he/she would be willing to pay, and the seller enters the value for which he/she is willing to sell the asset. If the two values are within a certain range of each other then the system sets the midpoint of the two submissions, or some other value agreed-upon by both sides, as the price of the asset. This system encourages both sides to negotiate in good faith because proximity of the two values leads to a faster settlement.

Disputes in Fair Outcomes are kept private (i.e. cannot be found on search engines). If a party wants to complain publicly about another after using Fair Outcomes, there are many other avenues for doing so.

Conclusion

These two sites facilitate settlement in different ways: PeopleClaim by introducing risk to reputation, and Fair Outcomes by incentives to negotiate in good faith. Fair Outcomes is likely to be more effective in disputes over property, in which both parties’ stakes in their online reputations is relatively low. Neither service is likely to help you in the case where the other party does not want to pay, because the reality is they do not have the teeth of the law, or the ability to call out the sheriff on you. But at the price point they offer their services, it may be an avenue to explore before going to the lawyer.

What both of these sites offer is a sneak-peak into the incredible changes that are occurring in the legal profession. Undertaking settlement negotiations using traditional lawyers are not only expensive, but the process is often lengthy and exhausting for both parties, regardless the outcome. By simplifying the settlement process, web-based legal services like PeopleClaim and Fair Outcomes are changing the landscape for (in my opinion) the better.

Monica Goyal, Entrepreneur, Lawyer and Innovator is the founder of Aluvion, a legal solutions company offering technology, paralegal and lawyer-driven solutions with a special focus on the quality, cost, and accessibility of legal services for both businesses and individuals. Monica began her career working as an engineer in R&D for companies like Toshiba, Nortel and Nokia while earning her Masters of Engineering at Stanford. Monica's history conditioned her to solve problems in a efficient and tech-savvy manner, an approach she brings with her to legal solutions. Monica currently sits on the Canadian Bar Association's Futures Initiative, and will be teaching a course on Legal Technology at York University’s Osgoode Hall. She was recently named one of 10 Women to Watch in Tech in the Journal of the American Bar Association.

Nicely researched and written up, Monica (and Josh). I agree with your assessments of the 2 products. PeopleClaim sounds a bit scary… with anonymous complainants! Though fear is one of our most basic motivators, I prefer resolution approaches which come from a more positive mindset. Fair Outcomes appears similar to SmartSettle.com (and other) e-negotiation tools – and like you say, tools that reward good faith bargaining.

http://www.peopleclaim.com Sally Treadwell

Great article—balanced and thoughtful.

I’d like to point out, however, that PeopleClaim.com complainants are not anonymous. Although you don’t see their names on the site for obvious reasons, they have to use a credit card to pay and also provide an email address for contact. The responding party can message them and even ask authentication questions. Complainants are responsible for the content of their complaint in the usual way.

In fact, what separates PeopleClaim.com from many online business review sites is the fact that a) the claimant has to pay a fee by credit card to file and b) they have to agree they are using the site in good faith to resolve a legitimate dispute with a party they’ve interacted with.

Once notified of the complaint, the opposing party can tell their side of the story, request more information or reject claims with or without an explanation. The real power of statistics: one or two unresolved claims against a business might reflect a few disgruntled customers, 5 or 10 are a red flag, 10 or more and the business is probably doing something very wrong…

We’ve had complaints up to $40,000 resolved, but one that really made us smile recently was someone who told us he was so glad he’d used PeopleClaim as a neutral ground instead of visiting the business and losing his temper. When the business responded, it transpired that there had been substantial misunderstandings on both sides. The two parties are once again doing business together.

http://www.fairoutcomes.com James F. Ring

As a principal of Fair Outcomes, Inc., I appreciate the favorable mention and the link to our website (www.fairoutcomes.com). Please permit me to correct the description of our Fair Buy-Sell system. It is not an online format for negotiations between someone that wants to buy something and someone that wants to sell something (i.e., between a known buyer and a known seller). It is a game-theoretic commitment mechanism that can be used by joint owners of property (such as divorcing couples or business partners) to determine who should buy the other out, and under what terms.

Fair Buy-Sell can be initiated by either party by confidentially committing to a value for the property at which they would not only be willing to buy-out the other side’s interest, but at which they would also be willing to sell their own interest to the other side. The other side is then invited to confidentially do the same. If the other side confidentially specifies such a value, then the party that specified the higher value is declared to be the buyer (because that party values the property more highly), but the sale price is set at the midpoint of the two values. Thus, when both parties use the system, you always get a solution, and the solution is always at least equal to, and generally far more favorable to each party than, the solution that each had proposed. This is not the case when parties use traditional ADR systems or systems offered by other companies such as those referred to in the article and the comments. Unlike those other systems, the structure of the Fair Buy-Sell system is such that the most sensible strategy for each side in the pursuit of its own self interest is to be strictly honest and fair.

In further contrast to those other systems, if one party initiates the Fair Buy-Sell system and the other does not respond, then the initiating party can (without having to disclose its proposed value) demonstrate via an affidavit from the system that the other side had walked away from a simple and fair solution under circumstances where it had no rational incentive or excuse for doing so (other than a desire to drag out the relationship and attempt to improperly profit at the other party’s expense). There are, in contrast, ample excuses for a party to decline to use traditional ADR and the other referenced systems, because a party may rationally infer and can credibly point out to others that those systems don’t create incentives for the parties to be honest and fair and, to the contrary, may be used by either side as a platform for posturing and seeking unfair concessions.

Fair Buy-Sell provides a good introduction to the principles that underlie all of our systems: in contrast to all other approaches to conflict resolution, our systems all employ a structure whereby the most sensible strategy for each side in the pursuit of its own self-interest is to confidentially commit to what it would consider to be a fair and reasonable outcome. All of our systems can be used online, and extensive information about each of them is available via our website. Again, we appreciate the fact that this article calls attention to our work and we would encourage readers that are interested in learning more to call or e-mail us using the contact information provided on our website.

http://www.hostgatorcouponsreview.com/ Jessica Owens

I think both of these online legal services have advantages and disadvantages in using them. It is up to users what kind of online legal services will best fit their needs.